In this article we will list those 15 countries with the highest corporate tax rates. Click to continue and to jump 5 countries with the highest corporate tax rates.
More or less every nation in the world taxes both its citizens and the companies operating in the country. Taxes have always been a very controversial issue in most countries as there are few people who can actually reach consensus on taxes. Many people and most businesses hate paying taxes because it naturally lowers the money they can actually take home and they believe that just giving it to the government is not justified. In many developing countries, where government corruption is rampant, this may make sense. After all, the taxes people pay don’t really bring many tangible returns in these countries. Instead, taxes are used to replenish the wallets of the corrupt. In addition, in such countries, laws and regulations about taxes and how they are collected are often lax, and even when they are not slack, their implementation and enforcement are subject to significant improvements, which is why many businesses and people get away with tax free.
Developed countries, on the other hand, are notorious for the high tax rates they levy on both individuals and companies operating in the countries. In Western Europe, the tax can often be around 50% of your income, which means that regardless of your income, 50% of the amount goes into the treasury. Despite this setback, many people in these countries, in fact the vast majority, support high taxes and even advocate higher taxes. This is because these developed economies have really high standards of living and the taxes they pay are used wisely to allow for better infrastructure development including roads and bridges while ensuring state-of-the-art public transport that is expensive and non-existent extremely on time which means people can rely on them completely. And knowing that these governments are transparent and not corrupt, people know that their money is being used wisely. Because of this, you see additional benefits in many developed countries, such as social health care, which alone can save you significant costs and which even the most powerful nation in the US cannot boast of.
Most companies hate paying taxes and are trying to find ways to avoid paying taxes. You see, the thing is, taxes are an incredibly complex subject, which is why these companies are happy to pay tax professionals big bucks to try to get around the various legal requirements so they can save a lot more money than they are paying out. One such way is the loss carryforward. If in most countries you are making losses rather than profits, you can carry those losses forward and offset them against future profits. This basically means that even if you make a profit in the next year, you may still not pay any taxes. This is used by many large companies like Amazon (NASDAQ: AMZN) which was a loss making company until a few years ago when it finally started making profits, largely thanks to its Amazon Web Services division currently competing with Google (NASDAQ: toget ) and Microsoft (MSFT). Despite a billion dollar profit, Amazon didn’t pay a dime in federal tax as it continues to offset its losses from previous years and all profits go into the pockets of the company’s owners. Most of these companies also operate in regions where corporate taxes are high, such as India, as there is a great demand there and a lot of money must be made for these companies.
As I mentioned earlier, taxation is a controversial issue and corporate taxation shares this opinion more than ever. Many people ask for deductions from tax paid by companies. This corporate lobbying has resulted in corporate taxes falling steadily on a global scale since the 1980s, while tax avoidance and tax evasion have increased at the same time. Before I go any further, let me explain the difference between the two terms. Tax avoidance means avoiding paying taxes by taking advantage of the law and legal loopholes and finding ways to avoid paying taxes, which corporate tax professionals do. This is completely legal. Tax evasion, on the other hand, uses illegal methods to avoid paying taxes and can result in fines, penalties, and even jail terms if companies are found guilty of tax evasion.
Corporate taxation enables better income distribution and helps bridge the gap between rich and poor. Corporate tax revenues account for more than a tenth of all tax revenues in developing countries, and the proportion varies from country to country. When businesses are not taxed or taxed at very low rates, high net worth individuals can simply set up shell businesses and store their income, which also allows them to avoid taxes on their personal income while an employed person does not have these options and will therefore pay more taxes while actually not making that much money. In the United States, 90% of company stock is owned by people in the top 10% for the country’s wealth. With corporate profits flowing to shareholders in the form of stock prices and dividends, taxing corporations means taxing the richest people needed to reduce inequalities and distribute wealth more evenly.
If corporate taxation is so beneficial to countries, why are governments consistently lowering corporate tax rates? The answer is simple. Since each country has its own laws and regulations and there is no single, focused effort, companies can easily move their headquarters or business operations from countries with high tax rates to countries with low tax rates. Not wanting to lose the revenue and economic stability that such large corporations bring with them, countries are willing to compromise and cut taxes or provide tax incentives. You may remember that Amazon, one of the largest companies in the world, was looking for a second city to set up a global headquarters in, cities made deals to the company, and often provided tax cuts and tax incentives to move the company away convince them to set up their headquarters there. You can also see this on a smaller scale in the US, where businesses are moving from one state with higher taxes to another state with lower taxes. One of the most recent and greatest examples is Tesla (NASDAQ: TSLA), which berated Silicon Valley and instead moved its headquarters to Texas, which has lower tax rates and a lower cost of living compared to California. Other companies like Hewlett-Packard (NYSE: HPQ) made the same move, while Palantir (NYSE: PLTR) moved from California to Colorado.
Some countries are called tax havens. A tax haven is generally an offshore country that has little or no tax rates and does not really work with foreign authorities, so companies operating in such tax havens can enjoy complete privacy. These countries encourage companies to register in such countries, resulting in economic improvements in the country and allow the company to store its money outside of countries with higher tax rates and therefore avoid paying taxes on that money. The Cayman Islands, the Bahamas, Belize, Bermuda and the Isle of Man are among the most famous tax havens in the world.
On the other hand, there are countries that charge quite high tax rates. The funny thing is that the country with the highest corporate tax rate doesn’t levy income tax on individuals. The other countries on our list often had very high tax rates, but have lowered them over the years. Even after the reduction, they are still among the 15 countries with the highest corporate tax rates. Our list is based on the average tax rates that countries have adopted over the past decade, with all data from KPGM. So without further ado, let’s look at the countries where companies need to do their part to improve the economy, starting with number 15:
Average tax rate over the last decade (2011-2020): 33%
We start our list with the only African country here in Cameroon.